E-Malt.com News article: 2618

Carlsberg’s presence in China: Carlsberg bought two Chinese breweries last year and is aiming at stronger presence in the region, the company said in a statement to their shareholders on May 6. Asian beer growth is putting mature western markets to shame. “Previously dominated by traditional wines, spirits and other drinks, the region is getting a taste for beer.” Since 1998, the total Asian market has grown by 12%, and is forecast to grow by 20% between now and 2007. Compare this with Western market growth rates of around 2%. Carlsberg has investments, licence production and exports all over the region and is one of the best-known international brands.

CEO of Carlsberg Nils S. Andersen is keen to build on this solid base with more investments in the next couple of years. “There are many interesting markets in Asia – China and Vietnam have significant growth potential, as do other smaller markets,” he says. “China is by far the largest market. We are already well established there, and we’re looking at further expansion.” The Chinese market has been a tough one to break into for Western brands, Carlsberg included. While a historical presence in the market has given a good foothold, it has proved diffi cult to expand the premium branded beer segment outside the westernised hotels and bars catering to expatriates and wealthy Chinese. Along with other Western brewers, Carlsberg has reevaluated its strategy in China, also focusing on the mainstream market.

“The market for foreign premium beers in China is still only a small part of the total beer market,” says Senior Vice President Jesper Bjørn Madsen, who looks after the region for Carlsberg at Corporate Headquarters. “We needed a strategy also focusing on the mainstream segment in order to fully exploit the huge potential.” The Chinese market is complicated. The brewing industry is locally or regionally based, with beer drinkers showing a strong preference for their local brews. Many local authorities have also given uneconomic breweries tax breaks in order to keep unemployment levels low.

Carlsberg’s response to the potential of the Chinese mainstream beer market has so far been to buy two breweries, Dali Brewery and Kunming Brewery, both in Yunnan Province in the south-west corner of the country. And in February, it was announced that Carlsberg has acquired a 50% share stake in Lhasa Brewery in Tibet. With the investment in Tibet, Carlsberg has further strengthened its position in West China.

Carlsberg Brewery Hong Kong also owns 99% of Carlsberg Brewery (Guangdong) Ltd. in the southern Guangdong Province, and 25% of Tsingtao Brewery Shanghai Songjiang Co. Ltd. The Dali brewery is the largest brewery in Yunnan. It is a medium-sized brewery with a yearly capacity of 1.2m hl beer, around 540 employees and a 41% market share in the province. Its most important beer brand – Dali 10.5 - is the market leader in the province. The Kunming brewery has about 400 employees and a yearly capacity of 600,000 hl beer. The two breweries’ total market share of the province is above 50%.

Yunnan Province has a population of 43 million with a yearly per capita beer consumption of only 4.2 litres. This provides great potential for growth given that the average per capita beer consumption in China is 18 litres. It has a special position in China as a gateway to South-East Asia, and is seeing more and more tourist and business trade and there is a strong trend that younger drinkers in the province prompted by a better economy are beginning to go for beers instead of wines and spirits. Also more middle-aged consumers are changing tastes – from local wines to beers.


12 May, 2004